Time inconsistency in games
Date: Tuesday 3 September 2019
Time: 2:00 p.m.
Place: Room 241, 2nd floor, Science III building
Decision makers with time-inconsistent preferences have been studied in great detail in recent decades. Addressing the dearth of literature on time inconsistency in a strategic context, our work provides the foundations for dealing with two-player games with naive and sophisticated players. We model various types' beliefs explicitly, and then proceed to define equilibrium notions based on these belief hierarchies. Second-order beliefs of naive players turn out to be crucial, and lead to different equilibria even in relatively simple games. We provide several examples, including models of bargaining and bank runs, showing the applicability of our framework.